Who chooses the repairman?

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07/09/2015 | Author: Editorial Staff

My seller client has an executed contract with a buyer. After the buyer completed his inspection during the option period, the buyer asked my client to make several repairs and to use a repairman the buyer chose. My client agreed to complete the repairs, but does he have to agree to use the buyer’s repairman?

No. TREC contracts require the seller to complete the agreed repairs before closing, but the contracts don’t provide for the buyer to designate who makes the repairs.

Note that the Completion of Repairs and Treatments Paragraph in TREC contracts requires the seller to either use someone who is licensed to make the repairs or, if no license is required by law, the seller must use someone who is commercially engaged in the trade of providing such repairs—unless the buyer and seller agree otherwise in writing.

This doesn’t mean a seller can never use an unlicensed handyman for electrical repairs. It means the seller must use a licensed electrician unless there is a written agreement between the buyer and seller to use that unlicensed handyman for electrical repairs.

Comments

Steven Harrison on 09/30/2015

Thanks for clearing up some of the technical nuances in contracting electricians. I was curious who chooses, or who is able to choose a repairman. I also wasn’t aware you can use an unlicensed repairman if that specific person is agreed upon beforehand.

Theresa Akin on 07/21/2015

Beyond me why I kept stating “Special Provisions’ when I meant the amendment and specific areas concerning repairs. Such a par 2, 5 or 9 (modifications). Thank you for bringing that to my attention. I stand corrected even though it was certainly misprint on my part. I was stuck on SP. As I did state though I rarely use SP.

Doris Snipp on 07/21/2015

Several cautions come to mind when reading the comments. Any information concerning repairs should be on the amendment not added to special provisions. The contract can only be changed by an amendment. Also not letting the mortgage company know about “in lieu of repairs” would be perilous. You should never advise a client not to send all amendments, agreements, etc. to the mortgage company. He will be ask at closing if he did anything under the table. You advising him to do such would make you also liable. Our clients trust us to guide them according to the rules and laws. They would not know we are not only misleading them but, possibly leading them into trouble. As for suggesting the buyer settle for cash to do the repairs, I would caution you that what seems like a simple electrical repair can turn into a new can of worms, once an electrician shows up and finds other issues. I would caution the buyer accepting cash rather than having repairs done. I would advise them to get several bids from professionals in the field. In the event the seller does the repairs, I would request licensed professionals for most repairs, an invoice describing the scope of the repairs and the invoice marked paid a week before the walk through.

THERESA AKIN on 07/10/2015

It wasn’t my contract. I rarely put anything in special provisions. In my earlier days as an agent my broker at the time wanted to mentor my contracts. That broker rewrote in special provisions one of the paragraphs. I had a title attorney look at it. He was in the building. Said it looked like I was trying to practice as an attorney and said to remove the words from the special provisions section. I happily did. Didn’t sit with me. Those incidents happened couple brokers back. I know about special provisions. There are many agents (seasoned and new (who listen to seasoned) who think they can rewrite. Unsure how many have lost their license but don’t want it to be me.

David Davis on 07/10/2015

@THERESA AKIN , Special Provisions is the absolute worst possible, very last place that a comment like that should go. Have you bothered to read the instructions about Special Provisions? They are right there in the paragraph.

THERESA AKIN on 07/10/2015

In addition to my last comment the seller chose his repairman and the buyer chose his.

THERESA AKIN on 07/10/2015

I have seen where in special provisions the seller will pay a cap of $xx amount of dollars in repairs. Any amount passed that would be up to the buyer.

T Perez on 07/10/2015

Bottom line for me is this: The owner of the property chooses who does the repairs.

If the “prospective owner” (Buyer) wants a specific company or individual to perform repairs, they can wait until they’re the owner. Then, they can and will assume all risk from whomever they pick.

David Davis on 07/10/2015

@Kristine Baugh, In regards to Special Provisions (paragraph 11 of the 1-4) I couldn’t agree with you more. This paragraph is regarded as the “death paragraph” in my agency. I try to teach my Agents that use of this paragraph is for all practical purposes forbidden. Save and except for extending the legal description of the property, and even then it is very dangerous.

As for “money in lieu of repairs” you are correct here also. I would never use (or encourage the use of such ridiculous language. The money amount would be addressed in paragraph 12 A (b) of the 1-4. If addressing specific repairs those would be addressed in paragraph 7 D (2); however, these repairs would typically need to be outlined in the offer phase, rather than after the contract exists. Additionally, just like you said any mention of repairs on the contract, is typically going to be a “red flag” for most lenders.

All of this being said, the topic of the tread remains about who can do the repairs. Either licensed professional(s), or contractors that are regularly engaged in the type of repairs to be performed as a matter of their regular business activity, and in either case, chosen either by agreement of parties (probably should be detailed in an amendment-both the repairs, and who will perform them), or chosen by the seller who still owns the home until closing and funding have occurred.

Kristine Baugh on 07/09/2015

Any consideration “in lieu of repairs” written that way in the contract is a certain red flag for mortgage underwriting. If the parties have agreed to a buyer credit or reduced price instead of repairs, just make that change without elaboration of what the credit/reduction is to be used for. The less we write in the Special Provisions paragraph, the better.

Bob Baker on 07/09/2015

The article appears to preclude the Parties from agreeing on a specific contractor to do a repair. I believe that not only can the Parties do so but in the spirit of being as specific as possible in repair requests I think agreeing on who does the work can be an effective best business practice. I agree that if the two Parties do not specific the contractor then the TREC contracts do not address that issue.

Candace Cargill on 07/09/2015

Using a licensed contractor or at least someone that is in that business on a daily basis is a good CYA for you and your client. Who wants to get sued after the fact for shoddy repairs that “looked” good at closing? I think I know the answer.

Kinda like using someone with a real estate license but not a REALTOR.

David Davis on 07/09/2015

@Brad Bowen “Vendors who will repair for insurance claim amount minus deductible”? This sounds real ethical, right up to the point where your name ended, and your post began.

Mike McEwen on 07/09/2015

A building permit is not required in unincorporated Cherokee County.

John on 07/09/2015

@McEwen
.
“Like it or not, in may rural counties, where there are no ordinances, you do not have to be licensed to do squat.”
.
This is an incorrect statement. Trade licenses, the laws that govern them, as well as who can and can not perform a function in a licensed trade is not controlled by local governments but instead by the State. Local governments only control permitting of work performed. No person in the State can perform the functions of a licensed trades person without a properly issued State license regardless of where the work is being performed.

Brad Bowen on 07/09/2015

Monetary settlement payable at closing is a better solution than is repair but Lender Appraiser must also be considered. Roof repair is the most significant item that can not be negotiated and must actually be done. Question: is Seller allowed to shop for Vendors who will repair for insurance claim amount minus deductible or is Seller compelled to repair roof in a manner consistent with opinion of insurance claim adjuster?

R. Don Huffman on 07/09/2015

The point that it’s the seller’s house until the transaction closes is well-made. If repairs are done by the buyer’s contractor and the deal doesn’t close, the seller has used a contractor likely unknown to the seller. Who can say whether the buyer’s contractor, licensed or unlicensed, is better or worse than the seller’s contractor? Perhaps any repairs done by a contractor requested by the buyer should be done AFTER closing, and paid for by the buyer.

Mike McEwen on 07/09/2015

Like it or not, in may rural counties, where there are no ordinances, you do not have to be licensed to do squat. In Cherokee County the only time a license is required is when putting in a new on-site sewage facility; and that is because of September 1989 state legislation. Nevertheless the wise thing to do is to use licensed professionals.

Charlie Still on 07/09/2015

A buyer can negotiate that a specific contractor be used, & if the seller agrees, then the buyer has chosen the contractor. Also from a practical standpoint, it’s much better after closing if any complications arise, if you used the buyer’s choice of contractor. Also, it’s obviously preferable to use a licensed contractor, but if against your advise a principal(seller) insists, there is nothing unethical with following your principal’s direction negotiating with the buyer to allow the seller to personally perform repairs or to hire an unlicensed handyman. It’s not smart for the buyer or seller, but they make the final, hopefully informed, decision.

Sue Slim on 07/09/2015

Gary Stephen, I agree with you 100%, this way the buyer will not come back to the seller incase the repairs were not satisfactory, and create a law suit, after all, the buyer requested the repairs

Rick DeVoss on 07/09/2015

It would seem that the discussion is getting off on other tangents…

The question was “Who selects the contractor?” ~~The answer is: Whatever is written in the contract. Let’s stop doing things verbally, ladies and gentlemen.

If the buyer wants a specific repair accomplished by a certain contractor, then that agreement has to be signed by the seller. (Good advice could push that one either way.) It would be prudent on the part of the buyer to put that in the initial contract language, ...not an amendment. (Sellers don’t have to agree to amendments…)

As advisers to our clients, we need to remember that a City Ordinance may require a Permit as well as a Licensed Contractor to handle the job. (What people do behind closed doors is their own business.) But if either party wishes to bend any rules, then BOTH of them had better be in agreement in writing!

Just remember: if you are thinking of actually spending the money for repairs, the buyer can always get it done cheaper than the seller. And it is a question of who is going to honor a warranty. Usually it goes to the person who paid the contractor, so does a buyer want the seller to be the one in charge of the operation?? ~Each situation is different, so think it through before you sign any contract or amendment. You might get the contractor to put the warranty in writing to the buyer…

Alan Wynn on 07/09/2015

The term “money in lieu of repairs” has always frustrated me. Money in lieu of what repairs? Unless repairs have been contractually agreed to, no repairs exist. So how can money be given in lieu of them? Seller Contribution at closing is what this is about. Nothing more. There is always a possibility of Buyer and Seller agreeing to repairs at any time before closing…regardless of Seller Contribution. These are mutually exclusive issues.

David Davis on 07/09/2015

@Dan Balcar In a world where we are expected to say what we mean, and mean what we say, the word “let” implies that the Agent is controlling what the Principal is doing. Your word advice on the other hand implies a specific duty Agent’s owe to a Principal. There is a HUGE difference in the meaning of the two words. So huge in fact, that one is (as mentioned) a duty that is owed, and the other very well may get you on the less than favorable end of a court judgment.

Joseph on 07/09/2015

“This doesn’t mean a seller can never use an unlicensed handyman for electrical repairs. It means the seller must use a licensed electrician unless there is a written agreement between the buyer and seller to use that unlicensed handyman for electrical repairs. “
.
This is very poor writing and lack of research! This is also very poor work by TREC who is a governmental agency and should know better. Anyone that does not heavily recommending a licensed Electrician should lose their license! The repairs are governed by the local city requirements (following minimum State laws) and in absence of such they are governed by the State laws. No person may advertise electrical services unless they are a licensed Electrical Contractor. So if the parties involved are not advised against using an unlicensed “Handyman” then they deserve the garbage work they get as a result and without any protections from the local city or the State.

Dan Balcar on 07/09/2015

@David Davis: Reread Luke’s comment: “Don’t ever let your seller sign anything they are Not willing to do verbatim to what it says.”

You have to read the whole comment. I think that is good advice.

Greg Lacy on 07/09/2015

If both repair persons are qualified, the one with the best price
may be the answer. If the buyer’s preferred provider is more
costly than the seller’s provider, the buyer could cover the difference
in cost, or accept the seller’s person. Money talks.

David Davis on 07/09/2015

@ Luke Speckman, your comment “Don’t ever let your seller sign anything” is a very poor example of representation of a real estate client. You might recommend, but as an Agent, you have no control over what your Client does or doesn’t do.

@Missy Stagers, Agree 100% with the money in lieu of actual repairs, unless they are actual lender required repairs (FHA/VA/USDA most commonly). Then the repairs will become necessary unless the parties agree to terminate the contract.

In any case, no the buyer does not have the right to dictate, or force the use of a specific repairperson(s). The seller still owns the home until closing. As such the seller can chose the contractor to make repairs as long as the other terms of the purchase contract are met such as licensed contractors, etc.

Cary Stephens on 07/09/2015

It is my practice to get the Seller and Buyer to quantify the repairs requested and agree to a monetary settlement payable at closing, whenever possible. The contract can be amended and credit given to the Buyer’s closing cost in lieu of all repairs. This allows the Buyer to select who they want to do the repairs and how they want the repairs done, after closing. All repairs would be strictly between the Buyer and the Contractor. This keeps the Seller from spending money prior to closing and possibly having needless repairs done and then the Buyer not completing the transaction. It also keeps the Seller and Agents out of the repair loop.

Missy Stagers on 07/09/2015

Repairs are the frustration of our business, if only we could get out of the repair business. Dollars in lieu of make it so much easier. Buyer and seller can agree to anything, however, it just all needs to be in writing and thought given to how it is written so it is clear.

Luke Speckman on 07/09/2015

The scenario isn’t clear but If the seller agreed and thereby signed an amendment that stipulated the repair be performed by a specific repairman by name, I would think there would be a contractual requirement to do so. If the seller verbally agreed to do so , then there is a moral obligation since this was the buyers reasonable expectation based on the sellers saying"OK” . Of course extenuating circumstances such as the repairman’s timely availability for
Completion could enter into it. My opinion. I.e. Don’t ever let your seller sign anything they are
Not willing to do verbatim to what it says. If even slightly unclear, then revise it and send back to the buyer. A little extra time hassle now can save a huge hassle later.

Mike McEwen on 07/09/2015

Technically the seller could agree to let the buyer chose the licensed individual. Not that that would be a good idea.

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